- FBI raids Trumps Mar-a-Lago home
- Traders sleepwalking into US CPI data tomorrow
- US dollar trades defensively in quiet overnight session
FX at a glance:
Source: IFXA Ltd/RP
USDCAD Snapshot: open 1.2843-47, overnight range 1.2846-1.2872 close 1.2856
USDCAD tracked broad US dollar sentiment and S&P 500 direction yesterday, which will be the case today.
Traders are focused on the upcoming US inflation report. A weaker than expected result will lead to comments that inflation has peaked and by default reduce the need for aggressive Fed rate hikes, which in turn would fuel talk of a global economic rebound. The subsequent US dollar sell-off would undermine USDCAD as well.
WTI oil traded spiked through the top of its $89.08-$$90.00/b range just before NY opened and touched $91.83/b. The move is a bit of a short squeeze ahead of US CPI, and because the Iran nuclear talks seem to have stalled.
There is no Canadian economic data today
USDCAD technical outlook
The intraday USDCAD technicals bearish below 1.2880, with a break below 1.2840 extending losses to 1.2820 then 1.2770. A move above 1.2890 suggests another move to 1.2950. The 1.2740-1.2980 range from July 18 remains intact. Longer term, the uptrend line from June 2021 is intact above 1.2605
For today, USDCAD support is at 1.2840 and 1.2810. Resistance is at 1.2890 and 1.2920. Today’s Range 1.2840-1.2910
Chart: USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
It’s a snooze-fest out there. The economic data cupboards are bare in Europe, the US, and Canada. Traders have lost interest in the China/Taiwan drama, and the Russian/Ukraine war is just a sideshow.
And speaking of sideshows, carnival barker and former US President Donald Trump is foaming at the mouth after the FBI rated his Florida house. The agents are looking for classified documents that Trump removed from the White House, which carries a five year penalty. How many tweets could Donny Trump tweet if Donny Trump still had a Twitter account to tweet?
Traders are sifting through evidence to determine if the US is in a recession. Central bankers, politicians, and the nonfarm payrolls report say it is not, while the 10’s 2s yield curve says otherwise.
The Fed can’t have the economy in a recession as it would handcuff its ability to hike rates to combat runaway inflation which will be on full display tomorrow. US July CPI is expected to have dipped to 8.7% y/y from 9.1% y/y in June. If so, the talk that inflation has peaked will be deafening.
EURUSD traded in a 1.0190-1.0247 range, with the bulk of the gains coming during the European session.
There wasn’t a specific catalyst for the rally except for position adjusting in anticipation of a weak US inflation number. The EURUSD technicals are bearish below 1.0290.
GBPUSD led the EURUSD move, rising from 1.2068 to 1.2129 after Bank of England Deputy Governor Dave Ramsden mentioned cutting rates in the event of an economic slowdown. However, markets completely ignored his comment that a rate cut scenario was not his forecast. GBPUSD technicals are bearish below 1.2210.
USDJPY was choppy in a 134.68-135.15 band ahead of Wednesday’s US inflation data, with activity curtailed by steady US 10-year Treasury yields at 2.792%.
AUDUSD traded in a 0.6966-0.6993 range with prices underpinned by an improvement in the Nation Australia Bank’s Business Conditions survey (actual 20 vs previous 14).
There are no US economic reports today.
Chart of the Day:US Yield curve
FX open, high, low, previous close as of 6:00 am ET
Source: Saxo Bank
Today’s Bank of China Fix: 6.7584, previous 6.7695
Shanghai Shenzhen CSI 300 rose 0.20% to 4,156.29
Chart: USDCNY 1 month